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Today in the Market (10/3/2022)

Good Evening. After the S&P 500 and Nasdaq Composite ended their first three-quarter losing streak since the 2008 Global Financial Crisis and the Dow recorded its first three-quarter losing streak since 2015, U.S. equities began October on a positive note on Monday.

The S&P 500 rose 2.59%, while the Dow Jones rose 2.66%, for the best day in over two months. The technology-focused Nasdaq Composite rose 2.27%.

NOT ENOUGH SOLD

Tesla Inc. (TSLA) shares declined by 8.61% after the world’s most valuable automaker sold fewer vehicles than anticipated in the third quarter (343,830 actual vs. 359,162 estimated) due to logistical challenges, and sluggish economic growth prospects raised questions about demand.

Despite record quarterly deliveries, Tesla fell short of market expectations due to an abnormally wide gap between production and delivery, as the company struggled to arrange sufficient transportation during the peak season at a cost-effective rate.

Going forward… Tesla still needs to accomplish its annual goal of a 50% increase in deliveries. Tesla will need to deliver more than 450,000 vehicles in the fourth quarter. According to Reuters, the company has set a goal to create approximately 495,00 Model Y and Model 3 units during the year.

CRYPTO RISK

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The Financial Stability Oversight Council (FSOC) warned that cryptocurrencies could pose dangers to the financial system if their total size or connection to traditional banking expands without regulation or supervision.

“The rapid growth of digital asset activities, including stablecoins and lending and borrowing on digital asset trading platforms, is an important emerging vulnerability,” the FSOC stated in a new report released.

Where does the danger lie? According to the report, many crypto-asset activities lack basic guidelines to protect against the risk of runs and prevent excessive leverage. According to regulators, there are significant gaps in regulating crypto assets. And because crypto companies lack consistent, standardized regulations, authorities believe companies can exploit regulatory gaps.

What can be done? The FSOC offers ten recommendations to mitigate the risks posed by cryptocurrencies. Such as Congress passing new legislation to give regulators authority over the spot market for crypto assets that aren’t securities, legislation to regulate stablecoins, and legislation that would provide regulators with the authority to view a crypto firm’s entire business.

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